Skill vs. Luck in Sports Betting
If you’re reading this you’ve probably bet on a sporting event at some point in your lifetime. If you’ve ever suffered a “bad beat” in one of those bets, think about some of the reasons why. Whether it’s an injury to the 1st string QB, a blown call by the 3rd base ump, or 2 meaningless free throws to lose by 7 when you had +6.5, you probably called the turn of events that caused you to lose “unlucky”. But was it really bad luck or did you lose because you made a bad bet?
Unfortunately, there are no easy answers to this question and you have to consider many different factors when trying to decide whether a bet is “good”. Some bettors would say that any bet that wins is a good one and while that’s undoubtedly true for your wallet, if you expect to have any long-term success betting you’ll need to dig a little deeper and ask some questions like:
Did you bet because you had some specific information that made you believe the posted odds were wrong or just because you “had a feeling”?
How much did you bet relative to your capital?
What odds did you bet at your sportsbook? What odds were available elsewhere at the same time?
In the short and even medium-term your results are going to be almost entirely dependent on luck (or if you’re mathematically inclined variance) but in the long run, your results are going to be determined by your answers to these questions. As you may notice, your answers are going to be almost entirely dependent on you and your skill as a bettor with luck playing almost no role in your long-term sports betting success.
The first 2 questions address your “Edge”. People in betting talk about edge a lot and often in the abstract, but in the end, it can easily be boiled down to a single number usually expressed as a percentage. If you make a bet that pays out at even money, the odds-implied probability of this bet is 50%, meaning that it should win half the time. If you have reason to believe that this wager will instead win 55% of the time, your edge in this scenario is 5%. Importantly, your edge can only be estimated prior to making the bet since you can never be certain that your estimated edge is really equal to the true edge.
Imagine you are transported to a sportsbook on a different planet where the only sport is Borfball. In this sportsbook, every bet offered on Borfball pays out at even money but since you’ve never heard of Borfball, you have no idea what you’re betting on and therefore no edge. Any bet you make in this book is going to be pure gambling, with zero expectation of gain. Still, your intuition tells you that not all Borfball teams are precisely evenly matched and so there must be some “good” bets that you can make here. So, what are some things you can do to increase your chances of winning in this scenario? Well, one obvious action would be to try and find out something about Borfball, who are the best teams, the best players, etc. Maybe you overheard that FC Zorlax’s star borfer is suspended for this match and so you bet against them. This is an example of an “edge” that you have developed through your “skill” as a Borfball bettor. You’re no longer blindly gambling, but instead making an informed wager and as a result, you now expect to make a few Krotons from your bet.
Back on Earth, edges are obviously quite a bit more difficult to come by, but there are still some simple things you can do to help yourself, even in the absence of specific information. Let’s take the example of a basketball game where the home team is favored by 5.5 points. Is 5.5 points a fair spread? And how would you know? I didn’t even tell you which 2 teams were playing! But if I tell you another sportsbook is accepting $100,000 wagers on the home team -6.5, you can probably feel good about betting them at -5.5 even without knowing which team it actually is. Comparing the odds available to you with the odds on the same even at different sportsbooks (aka “Line Shopping”) is another way that you can find an edge in sports betting. Information about the market can be just as valuable as specific information about a team or player when you are deciding what bet to make.
Developing an edge is obviously key to becoming a skilled sports bettor but even a large edge is not going to be terribly useful if you bet recklessly. Let’s say that through your hard work crunching numbers, insider sources, and line shopping, you find yourself with a 20% edge on this weekend’s big game. Let’s also say you have $10,000 dollars available to you to bet on the game (but no more than that, and also no savings in the bank). Even with a 20% edge, I hope you can see that if you bet the entire $10,000 this is a terrible bet. Even though the expected value of this bet is somewhere around $4,000, if you make enough similar bets you will eventually lose one and be left with nothing.
Finally, another key decision that can drastically affect your profitability as a bettor is your choice of where to place your bets. Of course, bettors will look for the best odds in order to maximize their return. Different sportsbooks offer different odds and the odds vary depending on the risk level of the books. Not to mention that UBet offers a fixed transaction fee (the vig) at 2.5%. Lowering transaction costs can make a big difference in your return, especially over a larger number of bets. Choosing the right place to play is a skill in and of itself!
We will post another blog that empirically shows how your return changes depending on the edge and odds-shopping via Monte Carlo simulations in the coming weeks.
Your feedback is always appreciated as we improve UBet. Please hop over to our Discord where we can address your questions directly or check out our other articles on Medium.
Website: http://ubetsports.io/
Twitter: https://twitter.com/UBet__Sports
Discord: https://discord.gg/B7brvUEAFG
LinkedIn: https://www.linkedin.com/company/ubetsports/
Disclaimer: The above content is intended for information purposes only and is not intended to be gambling, trading, nor investment advice. Please perform your own analysis before making any betting, trading, or investments based on your own personal circumstances or seek a duly licensed professional for gambling and trading advice. Accordingly, neither UBet nor its partners, directors, shareholders or employees are liable for any damage, expense, or other loss that you may incur out of reliance on the above information.